Q1. Suppose the demand curve for pizza in the café is given by Q=300 - 20P- 20P1, where P1 is the price of soda. The supply curve is Q=10P - 10. a) If the price of soda is P1= 5. Find the equilibrium price and quantity of pizza. b) Due to a price change of soda, the market equilibrium price per slice of pizza changes to P*=5. What must be the price of soda now? c)Calculate the cross-price (soda) elasticity of demand (pizza) at the equilibrium point in b), and determine whether pizza and soda are substitute or complement in this example?
Q1. Suppose the demand curve for pizza in the café is given by Q=300 - 20P- 20P1, where P1 is the price of soda. The supply curve is Q=10P - 10. a) If the price of soda is P1= 5. Find the equilibrium price and quantity of pizza. b) Due to a price change of soda, the market equilibrium price per slice of pizza changes to P*=5. What must be the price of soda now? c)Calculate the cross-price (soda) elasticity of demand (pizza) at the equilibrium point in b), and determine whether pizza and soda are substitute or complement in this example?
Chapter4: Markets In Action
Section: Chapter Questions
Problem 6SQ
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Q1. Suppose the demand curve for pizza in the café is given by Q=300 - 20P- 20P1, where P1 is the
a) If the price of soda is P1= 5. Find the
b) Due to a price change of soda, the
c)Calculate the cross-
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